Three Banks With Rising Shares, Big Dividends (NYB, UBSI, DCOM)

Investors usually must choose between stock-price appreciation and big dividends.
But a select group of small banks have seen their shares jump, with one posting an 18% increase this year while the S&P 500 Index has fallen 5%. Another is paying a dividend almost twice as high as the benchmark 10-year Treasury bond yield.

Following an earlier look at three bank stocks with outsized dividends, published in November, this expanded list features more conservative measures, excluding companies whose dividend payouts exceeded their 2009 net income.

The group was pared further by leaving out current participants in the Troubled Asset Relief Program, or TARP. Thinly traded names were also avoided, as were those with a Texas ratio of more than 20%. (The Texas ratio is nonperforming loans/core capital and loan loss reserves.)

New York Community Bancorp

New York Community Bancorp(NYSE: NYB) stand outs with a dividend yield of 6.74%. The shares have returned 22% since the company acquired the deposits and most assets of the failed Amtrust Bank in early December.

The Amtrust acquisition was a sweet deal for New York Community, fitting the company's strategy of expanding its retail deposit base as it moves away from more expensive wholesale funding. The company also received the now-customary Federal Deposit Insurance Corp. loss-sharing guarantee on the $6 billion in single-family mortgages and consumer loans it gained.

For several years through 2008, New York Community had been earning less than the $1 a share annual dividend it was paying. Net income was $170 million in the fourth quarter and $414 million, or $1.17 a share, last year, dropping the dividend payout ratio to 85.47%.

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